Today's Pick (10/10/11/183/623) Perks for SMEs will make Malaysia an Islamic financial hub

Perks for SMEs will make Malaysia an Islamic financial hub

THE proposed initiatives for small and medium-sized enterprises (SMEs) under Budget 2012 will not only strengthen the SMEs as growth drivers but promote the country's aspiration to become an Islamic financial hub, according to industry players.
Two of the four new funds were syariah-compliant the RM2bil SME Financing Fund and the RM500mil Commercialisation Innovation Fund. The other two were the RM100mil SME Revitalisation Fund and the RM10mil SME Emergency Fund.
The SME Financing Fund was to strengthen SMEs' contribution to economic growth while the SME Revitalisation Fund was for entrepreneurs to revive their businesses.
The SME Emergency Fund would provide assistance to SMEs affected by natural disasters and the Commercialisation Innovation Fund are for SMEs to commercialise research products.
Credit Guarantee Corporation Malaysia Bhd (CGC) managing director Datuk Wan Azhar Wan Ahmad told StarBizWeek that the syariah-based funds were good as they promoted the aspiration of the Government to promote Islamic finance.
“There is no indication which sector of the industry the RM2bil fund is targeting., This fund may attract the SMEs that already have facilities with conventional banks as they may switch to this due to its low cost of financing.
“New SMEs are more concern about access rather than cost. However, these schemes does not address the issue of credit risks as opposed to the schemes introduced in the last budget,'' he added.
The SME Revitalisation Fund, which offers soft loans of up to a maximum of RM1mil for entrepreneurs, is a preventive fund to help SMEs brace for any recession.
This fund was different from the previous SME rehabilitation schemes which only came onboard after a recession, he said, adding that the drawback was that the fund was small as in a recession, most of SMEs would apply for a maximum loan.
Meanwhile, SMI Association of Malaysia national president Chua Tiam Wee said the setting up of RM2bil syariah-compliant fund was timely as some of the popular SME funds by the government including the Working Capital Guarantee Scheme were almost used up.
He added the SME Revitalizing Fund, although relatively small in size, was good as it showed the Government understood that viable businesses could also be affected by external factors beyond their control such as an economic slowdown.
Wan Azhar: ‘New SMEs are more concern about access rather than cost.’
Chua hoped that the Government would top up the fund as it was expected to be sought after in view of the possible double dip recession in the United States and economic slowdown in Europe.
As the quantum of the National Emergency Fund was quite small, the association proposed that it should be disbursed entirely as grants instead of soft loans to help the affected SMEs.
Chua also welcome tax incentives for fees paid for franchise schemes as franchises were a proven successful business model and good for new SMEs.
On the Commercialisation Innovation Fund, he said it would help SMEs to commercialise new innovative products and services from R&D initiatives as commercial banks may not be keen to finance these ventures due to the risks involved

Source : The Star
Date : 8 October 2011
Today's Pick (10/10/11/183/623)